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How Did The Great Depression Affect The Economy

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Following World War I, the United States emerged as the world’s largest economic power, and along with this great prosperity came great propensity for great changes in society, which led to the decade known as the Roaring Twenties. During the 1920s, a new form of the American economy emerged which emphasized extremely high rates of consumption. The public began to buy as much as possible. Assisting this system was a concept known as installment buying that allowed people to acquire an expensive commodity, perhaps a new automobile or radio, and pay for it over months and months, in small amounts each time. Along with the increase in prosperity and consumption came a vast increase of popularity of the stock market. Before the 1920s, only the …show more content…

Furthermore, they bought farms from those too poor to own them. As a result of this investment, these methods of production continued to flourish, even if no one could buy them. Americans continued to starve, but not because food did not abound. Even if the Great Depression economically affected different income groups proportionally, the realistic impact told a different story. The top 10% of the US population by income continued to earn the same share of the total national income both before and during the depression. However, this statistic alone ignores the reality of that statement. The wealthy still had wealth, but the lower class went from having little wealth to threadbare none. Essentially, the upper class still invested in means of production that made them wealthy, but very few shared in the wealth. Due to lack of government involvement, a high tariff causing international isolation, and a circular economy that continued to put money in the pockets of those least impacted by the hard times, the Great Depression lasted a decade. Because of its extreme longevity (compared to most severe recessions), the Great Depression had a lasting impact on the United

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In a period known as bull market, the economy was booming and stock market trading increased, the economy flourished. Installment buying allowing Americans to buy more even if they didn’t have all the money. This helped the economy prosper throughout most of the 1920s. An important factor contributing to this economic was the automobile industry. As shown in Document 9, a graph from the Historical Statistics of the United States, the mass production of automobiles led to millions of people across the country buying automobiles.

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Now the rich people couldn’t even buy the luxury things they used to before like a 35,000 boat (Doc. 8) because they now had to precisely manage their businesses so they wouldn’t fall into this bottomless pit. Not many faced this problem though because the rich were scarce in this time period. Only two percent of the US’s population of families was making over ten thousand dollars a year (Doc. 9). All-in-all overproduction was a really big cause of the Great Depression but it didn’t have a biggest negative

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The majority of people made under 2,000 dollars a year (Document 9) which was considered the bare minimum to live off of, the buy all of the basic essentials. These people didn’t have any money to spend on luxury items and couldn’t buy on credit. During this time, some companies priced their goods at a higher price than the majority of people made in a year, like boats that were priced anywhere from 10,000 dollars to 35,000 dollars (Document 8). With nobody to buy from them, these businesses were left without a profit and began going bankrupt. An average family before the depression with two people working full time jobs only made around twenty dollars a week (Document 7).

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